I need my trial balance to be corrected as I know it does not match and I need a
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Question
I need my trial balance to be corrected as I know it does not match and I need a lot of help completing steps 8-11. Please do not ask for any more information as this is all that I have.
Record financial data that accurately captures business transactions according to accepted accounting principles:
A. Step One: Complete the “July Journal Entries” tab in your workbook using the Step One data in the appendix.
Step Two: Complete the “August Journal Entries” tab in your workbook using the Step Two data in the appendix.
C. Step Three: Complete the “September Journal Entries” tab in your workbook using the Step Three data and updated scenario information in the appendix. Note that there was an additional line of products added this month, so you must first complete the “Inventory Valuation” tab in your workbook and copy the journal entries from the inventory evaluation page into your journal for this month to ensure the impact of merchandising is reflected in your reporting.
Apply the accrual basis of accounting to correctly create adjusting entries in the preparation of financial statements:
A. Step Five: Prepare the unadjusted trial balance. Note that you should use the T account balances completed in Step Four to prepare the unadjusted trial balance portion of the “Trial Balance” tab in your workbook.
B. Step Six: Complete the “Adjusting Entries” tab in your workbook using the Step Six data in the appendix. Note that you should take the adjusting entries from this worksheet and enter them into the “Trial Balance” tab in your workbook.
C. Step Seven: Apply adjusting entries to create the adjusted trial balance. Note that the adjusting entries from Step Six will apply to affected accounts in the unadjusted trial balance to arrive at the adjusted trial balance.
Create financial statements by properly employing prescribed methods in accordance with generally accepted accounting principles:
A. Step Eight: Prepare the financial statements. Note that you must use your adjusted trial balance to prepare the income statement, statement of owner’s equity, and balance sheet. You must complete these statements in this order, as there are interdependencies among them.
B. Step Nine: Complete the “Closing Entries” tab in your workbook by closing all temporary income statement amounts to create closing entries.
C. Step Ten: Prepare the “Post Closing Trial Balance” tab for the next accounting period. [ACC-201-03] D. Step Eleven: Prepare the reversing entries in the “Reversing Entries” tab of your workbook.
Step One Data
The following events occur in July, 2018: July 1: You take $10,000 from your personal savings account and buy common stock in Peyton Approved.
July 1: Purchase $6,500 in baking supplies from vendor, on account.
July 3: Your parents lend the company $10,000 cash in exchange for a two-year, 6% note payable. Interest and the principal are repayable at maturity.
July 7: Enter into a lease agreement for bakery space. The agreement is for 1 year. The rent is $1,500 per month, and the last month’s rent payment of $1,500 is required at time of lease agreement. The payment was made in cash. Lease period is effective July 1, 2018, through June 30, 2019.
July 10: Pay $375 to the county for a business license.
July 11: Purchase a cash register for $250 (deemed to be not material enough to qualify as depreciable equipment—use misc. exp.).
July 13: You have baking equipment, including an oven and mixer, which you have been using for your home-based business and will now start using in the bakery. You estimate that the equipment is currently worth $6,000, and you transfer the equipment into the business in exchange for additional common stock. The equipment has a 5-year useful life.
July 13: Pay $200 for business cards/flyers/posters/ads to use for advertising.
July 14: Pay $300 for office supplies.
July 15: Hire part-time helper to be paid $12 per hour. Pay periods are the 1st through the 15th and 16th through the end of the month, with paydays being the 20th for the first pay period and the 5th of the following month for the second pay period. (No entry is required on this date; it is here for informational purposes only.)
July 30: Received telephone bill for July in amount of $75. Payment is due on August 10.
July 31: Pay $2,400 for a 12-month insurance policy. Policy effective dates are August 1, 2018, through July 31, 2019.
July 31: Accrue wages earned for employee for period of 16th through 31st of July (Wage calculations table provided below). July 31: Total July bakery sales were $15,000. $5,000 of these sales are on accounts receivable.
Step Two Data
The following events occur in August, 2018:
August 5: Paid employee for period ending 7/31.
August 8: Receive payments from customers towards accounts receivable in amount of $3,800.
August 10: Paid July telephone bill. August 15: Purchase additional baking supplies in amount of $5,000 from vendor, on account.
August 15: Accrue wages earned for employee from period of 1st through 15th of August (Wage calculations table provided below).
August 15: Pay rent on bakery space.
August 18: Receive payments from customers towards accounts receivable in amount of $3,000.
August 20: Paid $8,500 toward baking supplies vendor payable.
August 20: Pay employee for period ending 8/15.
August 22: $300 in office supplies purchased.
August 31: Received telephone bill for August in amount of $75. Payment is due on September 10.
August 31: Accrue wages earned for employee for period of August 16th through August 31st (Wage calculations table provided below).
August 31: August bakery sales total $20,000. $7,500 of this total is on accounts receivable.
Step Three
Updated Scenario: Many customers have been asking for more hypoallergenic products, so in September you start carrying a line of hypoallergenic shampoos on a trial basis. The following information relates to the purchase and sales of the shampoo: ? You use the perpetual inventory method. You are uncertain as to which valuation method to use—FIFO, LIFO, or weighted average, so you calculate inventory using all three and then decide which one you would like to choose. Data: The following events occur in September, 2018:
September 1: Paid dividends to self in amount of $10,000.
September 5: Pay employee for period ending 8/31. S
eptember 7: Purchase merchandise for resale. See “Inventory Valuation” tab for details.
September 8: Receive payments from customers toward accounts receivable in amount of $4,000.
September 10: Pay August telephone bill.
September 11: Purchase baking supplies in amount of $7,000 from vendor on account.
September 13: Paid on supplies vendor account in amount of $5,000.
September 15: Accrue employee wages for period of September 1 through September 15.
September 15: Pay rent on bakery space: $1,500.
September 15: Record merchandise sales transaction. See “Inventory Valuation” tab for details.
September 15: Record impact of sales transaction on COGS and the inventory asset. See “Inventory Valuation” tab for details.
September 20: Pay employee for period ending 9/15.
September 20: Purchase merchandise inventory for resale to customers. See “Inventory Valuation” tab for details.
September 24: Record sales of merchandise to customers. See “Inventory Valuation” tab for details.
September 24: Record impact of sales transaction on COGS and the inventory asset. See “Inventory Valuation” tab for details.
September 30: Purchase merchandise inventory for resale to customers. See “Inventory Valuation” tab for details.
September 30: Accrue employee wages for period of September 16th through September 30th
September 30: Total September bakery sales are $20,000. $6,000 of these sales are on accounts receivable.
Step Six Data
On September 30, the following adjustments must be made: ? [Note: This is a sample.] Depreciation of baking equipment transferred to company on 7/13. Assume a half month of depreciation in July using the straight-line method. ? Accrue interest for note payable. Assume a full month of interest for July. (6% annual interest on $10,000 loan from parents.) ? Record insurance used for the year. ? Actual baking supplies on-hand as of September 30 are $1,100. ? Office supplies on-hand as of September 30 are $50.
Here is the Inventory valuation tab-
87,014.33
FIFO USE THIS ONE FOR THE SEPTEMBER ENTRIES Date Purchases Sales Ending Inventory Dr Cr 7-Sep 10 $ 6.00 $ 60.00 10 $ 6.00 $ 60.00 7-Sep Merchandise Inventory (10 x $6) 60.00 Cash 60.00 15-Sep 8 $ 6.00 $ 48.00 2 $ 6.00 $ 12.00 Purchased inventory 20-Sep 20 $ 6.10 $ 122.00 2 $ 6.00 $ 12.00 15-Sep Cash (8 x $8.50) 68.00 20 $ 6.10 $ 122.00 Merchandise Sales 68.00 22 $ 134.00 Record sale of inventory 24-Sep 2 $ 6.00 $ 12.00 15-Sep Cost of Goods Sold (8 X $6) 48.00 16 $ 6.10 $ 97.60 4 $ 6.10 $ 24.40 Merchandise Inventory 48.00 $ 109.60 Recorded the cost of goods sold 30-Sep 25 $ 6.05 $ 151.25 4 $ 6.10 $ 24.40 20-Sep Merchandise Inventory (20 x $6.10 ) 122.00 25 $ 6.05 $ 151.25 Cash 122.00 29 $ 175.65 55 $ 333.25 26 $ 157.60 29 $ 175.65 24-Sep Cash (18 x 8.50) 153.00 Merchandise Sales 153.00 Record sale of inventory 24-Sep Cost of Goods Sold (2 x $6)+(16 x $6.10) 109.60 Merchandise Inventory 109.60 Recorded the cost of goods sold 30-Sep Merchandise Inventory (25 x $6.05) 151.25 Cash 151.25 LIFO Purchases Sales Ending Inventory 7-Sep Merchandise Inventory (10 x $6) 60.00 7-Sep 10 $ 6.00 $ 60.00 10 $ 6.00 $ 60.00 Cash 60.00 Purchased inventory 15-Sep 8 $ 6.00 $ 48.00 2 $ 6.00 $ 12.00 15-Sep Cash (8 x $8.50) 68.00 20-Sep 20 $ 6.10 $ 122.00 2 $ 6.00 $ 12.00 Merchandise Sales 68.00 20 $ 6.10 $ 122.00 Record sale of inventory 22 $ 134.00 15-Sep Cost of Goods Sold (8 X $6) 48.00 24-Sep 18 $ 6.10 $ 109.80 2 $ 6.00 $ 12.00 Merchandise Inventory 48.00 2 $ 6.10 $ 12.20 Record inventory reduction due to sale 4 $ 24.20 20-Sep Merchandise Inventory (20 x $6.10) 122.00 30-Sep 25 $ 6.05 $ 151.25 2 $ 6.00 $ 12.00 Cash 122.00 2 $ 6.10 $ 12.20 25 $ 6.05 $ 151.25 24-Sep Cash (18 x 8.50) 153.00 29 $ 175.45 Merchandise Sales 153.00 55 $ 333.25 26 $ 157.80 29 $ 175.45 Record sale of inventory 24-Sep Cost of Goods Sold (18 x $6.10) 109.80 Merchandise Inventory 109.80 Record inventory reduction due to sale 30-Sep Merchandise Inventory (25 x $6.05) 151.25 Cash 151.25 weighted average Purchases Sales Ending Inventory 7-Sep Merchandise Inventory (10 x $6) 60.00 7-Sep 10 $ 6.00 $ 60.00 10 $ 6.00 $60 Cash 60.00 Purchased inventory 15-Sep 8 $ 6.00 $ 48.00 2 $ 6.00 $ 12.00 15-Sep Cash (8 x $8.50) 68.00 20-Sep 20 $ 6.10 $ 122.00 2 $ 6.00 $ 12.00 Merchandise Sales 68.00 20 $ 6.10 $ 122.00 per unit Record sale of inventory 22 $ 134.00 $6.09 15-Sep Cost of Goods Sold (8 X $6) 48.00 24-Sep 18 $ 6.09 $ 109.62 4 $ 24.38 Merchandise Inventory 48.00 Record inventory reduction due to sale 30-Sep 25 $ 6.05 $ 151.25 4 $ - 25 $ 6.05 $ 151.25 20-Sep Merchandise Inventory (20 x $6.10) 122.00 55 $ 333.25 26 157.62 29 $ 151.25 $5.22 Cash 122.00 24-Sep Cash (18 x 8.50) 153.00 Merchandise Sales 153.00 Record sale of inventory 24-Sep Cost of Goods Sold (18 x $6.09) 109.62 Merchandise Inventory 109.62 Record inventory reduction due to sale 30-Sep Merchandise Inventory (25 x $6.05) 151.25 Cash 151.25Explanation / Answer
Accountants use a trial balance to scan the equality of their debits and credit. A trial steadiness is a list of the ledger bills and their debit or credit balances to verify that debits equal credit in the recording method. Getting ready and adjusting trial balances support within the instruction of correct economic statements. Even though you can prepare a trial stability at any time, you possibly can almost always prepare a trial stability before getting ready the financial statements.
On the trial steadiness the bills should show up in this order: assets, liabilities, fairness, dividends, revenues, and expenditures. Within the assets category, probably the most liquid (closest to becoming money) asset appears first and the least liquid appears last. Inside the liabilities, these liabilities with the shortest maturities show up first. Learn the following example of a trial stability for the more flora trade. Word that totals for the Debit and credit score entries come from the ending stability of the T-accounts or ledger cards. When utilising T-bills, if the left aspect is better, the account has a DEBIT stability. If the proper facet is better, the account has a credit score steadiness. When utilizing ledger cards, you'll be calculating the stability after every transaction and the steadiness in most cases follows the ordinary steadiness of the accounts (keep in mind, common balance is how we expand an account).
The equality of the 2 totals within the trial steadiness does not necessarily imply that the accounting approach has been error-free. Critical error will have been made, corresponding to failure to document a transaction, or posting a debit or credit score to the wrong account. For example, if a transaction involving fee of a $ a hundred account payable is under no circumstances recorded, the trial balance totals still balance, however at an amount that's $ one hundred too high. Both money and debts payable would be overstated by using $ one hundred.
While we nonetheless have no longer prepared monetary statements, we've got captured the activity and prepared it right into a trial stability. Next up is enhancing the know-how earlier than we are able to submit our story in monetary statements.
Error Correction
When the trial steadiness does no longer steadiness, are attempting re-totaling the two columns. If this step does not find the error, divide the difference within the totals via 2 and then by using 9. If the difference is divisible through 2, you may have transferred a debit-balanced account to the trial balance as a credit, or a credit score-balanced account as a debit. When the difference is divisible with the aid of 2, look for an quantity within the trial balance that is equal to one-half of of the change.
If the change is divisible by way of 9, you will have made a transposition error in transferring a balance to the trial stability or a slide error. A transposition error happens when two digits are reversed in an quantity (e.G. Writing 753 as 573 or 110 as one zero one). A slide error occurs whilst you situation a decimal factor incorrectly (e.G. $ 1,500 recorded as $ 15.00). Therefore, when a change is divisible with the aid of 9, examine the trial steadiness quantities with the overall ledger account balances to look when you made a transposition or slide error in transferring the quantities.
In case you still can't find the error, it can be due to one of the most following factors:
Failing to post a part of a journal entry.
Posting a debit as a credit score, or vice versa.
Incorrectly picking the steadiness of an account.
Recording the balance of an account incorrectly in the trial balance.
Omitting an account from the trial balance.
Making a transposition or slide error within the money owed or the journal
traditionally, you should work backward through the steps taken to organize the trial balance. Assuming you've got already re-totaled the columns and traced the amounts appearing within the trial balance back to the overall ledger account balances, use the next steps: verify the steadiness of each and every basic ledger account, affirm postings to the general ledger, confirm basic journal entries, after which assessment the transactions and in all likelihood the supply records.